1. Dinesh and Mahesh are partners …

1. Dinesh and Mahesh are partners sharing profits and losses in the ratio of 3 : 2. They admit Ramesh into partnership for 1/4th share in profits. Ramesh brings in his share of goodwill in cash. Goodwill for this purpose shall be calculated at two years’ purchase of the weighted average normal profit of past three years. Weights being assigned to each year 2017–1; 2018–2 and 2019–3. Profits of the last three years were: 2017—Profit ` 50,000 (including profits on sale of assets ` 5,000). 2018—Loss ` 20,000 (including loss by fire ` 35,000). 2019—Profit ` 70,000 (including insurance claim received ` 18,000 and interest on investments and dividend received ` 8,000). Calculate the value of goodwill. Also, calculate the goodwill brought in by Ramesh. [Ans.: Goodwill—` 69,000; Ramesh shall bring 1/4th of ` 69,000, i.e., ` 17,250 as Goodwill.] 2. Manbir and Nimrat are partners and they admit Anahat into partnership. It was agreed to value goodwill at three years’ purchase on Weighted Average Profit Method taking profits of last five years. Weights assigned to each year as 1, 2, 3, 4 and 5 respectively to profits for the year ended 31st March, 2015 to 2019. The profits for these years were: ` 70,000, ` 1,40,000, ` 1,00,000, ` 1,60,000 and ` 1,65,000 respectively. Scrutiny of books of account revealed following information: (i) There was an abnormal loss of ` 20,000 in the year ended 31st March, 2015. (ii) There was an abnormal gain (profit) of ` 30,000 in the year ended 31st March, 2016. (iii) Closing Stock as on 31st March, 2018 was overvalued by ` 10,000. Calculate the value of goodwill. [Ans.: Value of Goodwill—` 4,17,000.] 3. Mahesh and Suresh are partners and they admit Naresh into partnership. They agreed to value goodwill at three years’ purchase on Weighted Average Profit Method taking profits for the last five years. They assigned weights from 1 to 5 beginning from the earliest year and onwards. The profits for the last five years were as follows: Year Ended 31st March, 2015 31st March, 2016 31st March, 2017 31st March, 2018 31st March, 2019 Profits (`) 1,25,000 1,40,000 1,20,000 55,000 2,57,000 Scrutiny of books of account revealed the following: (i) A second-hand machine was purchased for ` 5,00,000 on 1st July, 2017 and ` 1,00,000 were spent to make it operational. ` 1,00,000 were wrongly debited to Repairs Account. Machinery is depreciated @ 20% p.a. on Written Down Value Method. (ii) Closing Stock as on 31st March, 2018 was undervalued by ` 50,000. (iii) Remuneration to partners was to be considered as charge against profit and remuneration of ` 20,000 p.a. for each partner was considered appropriate. Calculate the value of goodwill. [Ans.: Goodwill—` 3,75,000.] 4. Calculate the goodwill of a firm on the basis of three years’ purchase of the weighted average profit of the last four years. The appropriate weights to be used and profits are: Year 2015–16 2016–17 2017–18 2018–19 Profits (`) 1,01,000 1,24,000 1,00,000 1,40,000 Weights 1 2 3 4 On a scrutiny of the accounts, the following matters are revealed: (i) On 1st December, 2017, a major repair was made in respect of the plant incurring ` 30,000 which was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% p.a. on Reducing Balance Method.

Accounting for partnership Firms Fundamentals notes

On 1st April ,2019 ,Mathew Ltd issued 10,000,9%Debentures of rs.100each at a discount of 5%,redeemable at premium of 5%.These debentures were redeemable as follows: On 31st March ,20-2000debentures On31st March,21. 5000Deb On 31st March 22. 3000Debentures . Prepare account for loss on issue of debenture , 9%Debentures ,and premium on redemption

Ativ, Meha and Nupur were partners in a firm sharing profits and losses in the ratio of 5 : 3:2. On 31-03-2016 their Balance sheet was as under: Liabilities Amount (T) Assets Amount (R) | Trade Creditors 26,500 Bank 23.500 Debtors 1,00,000 Stock 50,000 Fixed Assets 40,000 Advertisement Expenditure 25,000 Employees Provident Fund Ativ's Capital Meha's Capital 30,000 55,000 1,20,000 Nupur's Capital 10,000 2,40,000 2,40,000 Ativ retired on 1-4-2016. For this purpose, the following adjustments were agreed upon: (i) Goodwill of the firm was to be valued at 2 years purchase of the average profits of 3 completed years preceding the date of retirement. The profit for previous years were: 2013-14 55,000; 2014-15 7 65,000; 2015-16 7 60,000.

B and C are partner sharing profit in the ratio 3 2. Goodwill appears in the book at Rs3000 DIs admitted into partnership on payment of 2000 for 1/4, share as goodwill .B and C between themselves.Sharing future profit and loses equally given journal.

Gita Radha and Garv are partner sharing prophets in the ratio of 1 by 2 2 by 5 and 1 by 10 find the new profit sharing ratio of the remaining partners if girl retires

Q. 120. Risha and Nisha were partners. The partnership deed provides: (1) That the accounts be balanced on 31st December each year. (ii) The profits be divided as follows: Risha one-half, Nisha one-third and carried to Reserve account one-sixth. (ii) That in the event of death of a partner, her executor will be entitled to the following: (a) The capital to her credit at the date of death. (b) Her proportion of profit to date of death based on the average profits of the last three completed years. (c) Her share of goodwill based on three year's purchase of the average profits for the three preceding completed years. On 31st December, 2020 the Trial Balance was as under: Particulars Risha's Capital Nisha's Capital Reserves Bills Receivables Investments Cash Creditors Dr. (3) Cr. (3) 90,000 60,000 30,000 50,000 40,000 1,10,000 20,000 2,00,000 2,00,000 The profits for the three years were: 2018 ₹4,200; 2019 ₹3,900 and 2020 ₹4,500. Nisha died on 31st May, 2021. Draw up the deceased Partner's Capital A/c and Executor's A/c. Ans. Balance due to Nisha's Executor's ₹77,740.]

U and V Were Partners in a firm

The capital of the firm of anuj and benu is , 100000 and the market rate of interest is 15% . Annual salary to the partner is 60000 each. The profit for the last three years were , 300000 ,360000 , 420000. Goodwill of the firm is to be valued on the basis of two years purchase of last three years average super profit

Q. 46. Ayushi and Shristhi are partners sharing profits in 3 : 2. Their Balance Sheet showed Stock at ₹3,10,000; Machinery at ₹4,95,000; Debtors at ₹6,00,000; Creditors at ₹3,47,000. They admit Tina as a partner and new profit sharing ratio is agreed at 4: 3: 2. Following terms were agreed : (1) Machinery is overvalued by 10%. (ii) Unrecorded debtors of ₹20,000 be brought into books and provision for doubtful debts be created at 10%. (iii) Creditors of ₹27,000 are not likely to be paid. Shristhi's share in loss on revaluation amounted to ₹36,000. You are required to calculate the revalued value of stock

Rao and Majumdar are partners sharing profits and losses in the ratio of 3: 2. Rao died on 31st December, 2020. The following was the Balance Sheet on that date: Payment to Executors in Instalments Liabilities Amount Assets Amount ed on 281 Creditors Reserve Rao's Capital Majumdar's Capital 24,000 Cash at Bank 15,000 Stock 18,000 40,000 Amount 18,000 25,000 Debtors Furniture 20,000 35,000 The share of Rao in firm's goodwill was agreed at 36,000. Assets and liabilities were valued reasonably. Assuming that 10,000 was paid immediately on January 1, 2021 and the balance was payable in three equal instalments on 31st December every year and interest was payable @ 12% per annum on unpaid balance. Prepare Rao's Executor's Account.